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jeff4757

Subcontractor performance-delivery

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Folks-

Our company awarded a number of PO's for highly critical engineered components. A PO was issued and subsequently acknowledged by the supplier. NO exceptions taken to either delivery or T&C's.

The supplier has missed initial delivery requirements, has provided revised dates and yet again has missed. Our firm has no clause for Liquidated Damages.

Our firm wishes to issue a cure notice and incorporate a penalties clause for missing any additional delivery forecasts.

Are we within our rights to do so?

Your feedback is appreciated!

JP

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What do your purchase orders say? Those, and the laws of the state that govern your subcontracts, are what matter.

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jpayne, a more fundamental question is whether you even have a contract. Was the PO issued on a unilateral basis? Did the supplier ever accept it? Not taking exception is generally not the same as acceptance. I suggest you check this question with legal.

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As noted above, the laws of your particular state and the terms of the Purchase Orders are critical. As a matter of general principal, it seems to me that you cannot unilaterally impose a liquidated damage provision in your purchase order. Your supplier may be willing to accept a liquidated damages provision in exchange for an additional performance period extension. Whatever you do, you should make this a bilateral agreement that becomes binding on both parties (I cannot tell if the current purchase order is unilateral or bilateral; if it is unilateral it is not clear what remedies you may ultimately have should the supplier fail to deliver).

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AND this is why a prime contractor's performance risk can NEVER be transferred to any subcontractor.

H2H

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